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tv   Mad Money  CNBC  May 9, 2014 6:00pm-7:01pm EDT

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for more "options action" go to our website and also, of course, check out the daily segment inside fast every day. we'll see you back here next friday at 5:30 p.m. in the meantime, mad money starts right now. my mission is simple. to make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere. and i promise to help you find it. "mad money" starts now. hey i'm cramer. welcome to "mad money," welcome to cramerica. my job is not just to entertain you but to educate you. so call me at 1-800-747-cnbc or tweet me. another week where it gravitated from growth to value. another week where boring was good and exciting was bad. at least some of the stocks were
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able to hold their own. the dow climbing 32 points and s&p advancing 32.5% and the nasdaq .5%. we're going to stick with recommending value over growth and keep warning you that expensive growth stocks aren't done going down. so let's dive right into next week's game plan. by now, you might have figured out that i'm wearing these head phones for a reason. namely because beatz the company that makes them is rumored to be the target of a $3.2 billion take over by apple. a company with very little momentum but a ton of value that still trades at a discount in the s&p 500 even after it's monumental recent run. it's great to listen to motzart and to the top of the show. the absurdity of today's guessing game is people checking football to find out if it's real.
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are they or aren't they going to buy them weighed down the stock and caused serious head scratching as to what the heck is apple doing with this? i have my speculations. chief of which is that apple is not just buying a head phone company or streaming music service. it's also buying a yen to ceo tim cook's yang in the form of one of the industry execs that cofounded beatz and understands where newsic business is going. it's the brain child of hip hop titan dr. dre. apple has a real cool per share rating now and it gets more than a billion dollars in revenue. but he was an old pal of steve jobs who debated jobs on the need for a streaming subscription music rental
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business versus the itunessh ownership model jobs favors. it should sure help apple if it would come aboard and turn around the music division. itunes is now in actual decline. because this service is like pandora and spotify which has been winning all over the world. why do i think it might be the real reason for this deal? simple because if am wanted music and head phones they would buy pandora rather than buy beatz. pandora is 4.5 billion. apple could get them for 6 million and be the leader in music. it would own a company that makes better head phones along with the tens of millions of cars. if apple were to buy harmon it would own an entire ecosystem. not only that but harmon is a sound system on hand helds like the htc phone that would do
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wonders for the sound coming from the iphone. right now they have a car play thing but i think buying the company as well as pandora for $16 billion would send apple's stock to the moon but if they just buy beatz the stock could drop another 2 to 3%. how many people are going to understand the importance of one man? even if that man can dramatically augment the value of am overtime? monday is going to tell the tale. tuesday we hear from the company behind one of the most volatile stocks out there. fossil. a lot of people regard fossil as a faddish watch maker. we'll learn more about them into wearable devices which makes this stock undervalued. it's difficult to buy fossil just for that but we know the accessories business has a risk. but it also has rewards. namely the profits michael kors is giving you. i'm going to take the over on
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fossils earnings. there's a lot of doubters about take two interactive when we push it real hard because we like what the ceo said about how grand theft auto has been doing. it just keeps getting strong er. some people are saying could it be a second ea. that's a tall order. is ea truly shocked people. what might have been the biggest earnings beat of 2014 but i do think take 2 can work it's way higher. i'll be interested to hear about howell they're coping in the new world. we have one of the most controversial names out there. it's funny. deere the manufacture. it's been a rocket as of late even as his competitor has been stalled. it's rallied trading up to 94 dollars. when it's executives start talking on a conference call they'll be very conservative and the stock is going to get hit. sell some into the early morning
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before the executives talk the stock down. that's been the pattern for years now. i can't wait to get results from soda streams wednesday because i'm sick and tired of hearing that pepsico is going to buy a stake in the company. look i'm not a fan of soda stream stock. it trades on rumors which can't be gained. if they put an end to them they'll trade on earnings and that will take the fizz out of the situation. couldn't resist. and then wednesday night we hear from cisco and i'm more nervous about this one. after cnbc contributor herb greenburg threw what he calls the yellow flag at cisco. as herb's reality check starts and i'm quoting here, when they report erngs may 14th there's reasons to be surprised if it doesn't disappoint or offer another bigger warning than last september. the reasons, the public
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documents are chocked full of evidence of an inventory pile up that could conceivably distill one more dramatic vision down in earnings estimates. you have now been warned. if that's what we get, this stock is going lower. thursday is a big retail day and i picked three up to emphasize it. judging by the good news we got from costco and gap this week, spring may have sprung and we get descent quarters from co kohl's, wall street and jcpenney. it makes walmart a descent buy into the quarter. particularly if it comes down ahead of its report. i know people that want to speculate with penny. it's a one up one down situation. that's not a great risk reward. i can't stop you from doing what you're going to do. finally friday we get housing start figures and those will matter. the industry slowed down when it started speeding up.
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too little inventory of new homes and older poem homes selling with too expensive mortgage money. if we get fewer than 1 million housing starts you can perhaps at last bring stubborn mortgage rates down too. if you notice i'm going all in far value next week with the possible exception of fossil and i'm hoping that apple doesn't do anything to destroy it's own value or to put it another way, if you want him so much write him a giant check. if not forget beatz and spend 16 billion to buy pandora and harmon so you can own music here there and everywhere. let's go to john. >> caller: hey, jim. a big booyah. >> my old hometown. booyah. what's going on. >> caller: love your show. and wondering what your take is on hasboro. >> it's a juggernaut. got it together. it's a great cash cow. i would want to buy hasbro.
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let's go to tom. >> hey, jim, i have a question. they just reported last night and they beat by 10 cents and it was a blowout and they guided up for q 2 and yet they were barely budgeting. >> well, tom, come on, man. that's this software does a disservices to your portfolio. all of them came public at the same time and have to tell you there isn't a single one that i'm recommending. this week we saw the money gravitate from growth to value and next week won't be much different. boy i really hope apple doesn't destroy it's own value. we'll find out on monday morning though. still ahead, they made big news when they called it quits but probably didn't make you any money. coming up i'll talk about the break ups that can create more money. coming up after the break. don't miss a second of "mad money." follow @jimcramer on twitter. have a question?
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tweet cramer #madtweets. send an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. really... so our business can be on at&t's network for $175 dollars a month? yup. all five of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line anytime for 15 bucks a month. low dues... great terms... let's close. new at&t mobile share value plans. our best value plans ever for business.
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breaking up is not only hard to do. it's painful, messy and down right miserable but for companies the rules are different. there's many businesses where breaking up is incredibly lucrative. i stressed it in get rich carefully for the simple reasons that these corporate split ups and spin offs have a long-term record of creating value for you, the shareholders. so whenever we get a new one i try to jump all over it and explain it to you. there's a huge number of companies that can take control of their own destiny and own stock price. we call it self-help with the stroke of a pen by breaking up. we have seen this strategy work time and again. tyco, marathon, conoco, and at this point we have the whole
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corporate break up down to a science. that's why tonight i want to tell you about three recent break up stories that i believe can help you to try to make serious money. energizer, mondelez and alient tech systems. first let's talk energizer. enr is the symbol. you may know it as a battery company but energizer has become a real toxic stew of businesses that really don't belong under the same house of pain roof. for over a decade in order to get away from the old fashioned battery business which is in that slow motion secular decline, energizer has been moving into the personal care space. trying to become a mini procter & gamble. they're owner of edge and skintimate and their hands are
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in the feminine hygiene business and diaper geenie. but even though energizer has been through aggressive restructuring and made smart acquisitions, it's still a company that don't really belong under the same roof. wall street likes companies that are easy to understand. when you have a hodgepodge of companies too complicated like a hybrid maker both batteries and tampons the market isn't going to give it back what it deserves. energizer has a fast growing business but it still trades like a stand alone battery company. that's why it was so huge last week when on april 30th energizer announced it would split off it's personal care and household products business like a separate entity. it caused the stock to jump to $111 for a 15% gain in one session. this is the example of the break
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up we adore here on mad money. they're splitting them into two separate companies and bingo the battery company can become a cash cow. this market likes dividends because interest rates are so low while the faster growing personal care company can make smart acquisitions to expand the business. laser focus. combined they're neither fish nor foul but separate they can get much higher values. after the break up happens, i wouldn't be surprised if either of these companies stays independent for long. right now energizer is only a couple of points off it's high. wait for a bout of weakness and then you buy. >> next up there's mondelez. it's a global snack company a product of the kraft business. the faster growing worldwide
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businesses, oreos, chips ahoy, they went to mondelez. but in a way it wasn't complete. they were still a company left with the old kraft coffee business. think of it as a child of divorced parents that still had issues to work through. two days ago the company came out with a bold plan. they're going to split off their coffee business and combine it with de master blenders. that's another corporate spun off by the old sara lee in late 2012. under the terms of the deal they maintain a 49% stake and get $5 billion which they'll use to pay down debt and buy back stock. this was so intelligent. in one fair swoop they streamlined the business and more focused on snacks. it liberated itself from the extreme volatility of coffee prices. they're all over the map and at the same time the company now
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owns 49% of a major coffee firm that will be better able to challenge it's come pet tors and let's forget the 5 billion it was able to get out of the deal. much of which it will be able to return to you if you're a shareholder. it can do a better job of managing it's business and they'll also reward the cash with a higher price, that means it will pay for more being closer on the snack market. people like the snack business. they would love it if frito lay would be spun off. by the way, lost in the shuffle of the big coffee deal is the fact that they reported this amazingly good quarter. announced a $3.5 billion restructuring in the same day. they're taking control of its own december any by any means necessary. and finally there's alliant tech systems. they deal in lead.
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apparently they also deal in deals. they merged with orbital sciences. create a power house to manufacture everything from space launch vehicles satellites, and aircraft structures. at the same time, they're spinning off the fast growing sporting business which makes ammo for recreational shootings. these moves made so much sense it was dazzled when it first happened. it's been growing faster than the rest of the country for some time as gun enthusiasts stock up with supplies. the merger will allow defense oriented businesses to better handsel the decline in spending by giving them the expertise to build the businesses. they have given us an amazing 130% gain as i recommend back in january of 2013 but i think the stock has a lot more upside here because the merger just makes a ton of sense. just as important, you get a
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substantially higher multiple d after the spin off. it's why you expect the stock to keep rallying ahead of the deals. let me give you the bottom line. there's money made here. break ups can unlock tremendous value for shareholders and even though energizer and atk have already rallied in response to the news that they're splitting up, all of them documented in get rich carefully, there's still money to be made in the time between when a break up is announced and when it happens and even after that. so put them on your shopping list right here and then use any weakness to snap them up. hey, knowing this market, it will be more than happy to give us these opportunities. let's speak to gregory in california. >> caller: hey, from northern california, jim. >> how you been. >> caller: okay. >> what have you got for me? >> caller: my portfolio is safeway, swy, and i'm thinking of changing over to netflix or
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tesla. what do you think? >> those are really much more speculative than safe way. i'm not going to endorse that. i would prefer you to be in kroger or if you like that business i want you in whitewave. tesla and netflix were from another era. we're now out of the cut stock game and we're looking for more fundamentals and that's why i like kroger. all right. dealing with the break up is hard but sometimes two is better than one. breaking up on wall street is a money making theme i keep coming back to and energizer, mondeleze and alliant tech is a great example. there's still money to be made. use any weakness. and up ahead, a stock brought down 20% today. could what brought it down take yours down too? stay with cramer. >> coming up, risky business. it's the biggest mistake you could make managing your money and more people are guilty of it than you would ever imagine.
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don't move. cramer has got your back. when he opens his playbook, next.
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>> they're all different yet they're kind of the same. i'm talking about the incredible shrinking e-commerce plays that came public to much fanfare and
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are now just pure heart ache to their shareholders. the destruction in the market seems to be a weekly occurrence and it's spreading throughout all things internet related. today it was rocket fuels turn to blow up. here's an online advertising play that helps companies figure out how to place ads on the web to get the most bang for their buck. names that include channel advisor all of which wracked up gigantic prices and none of which would want to be named in the same paragraph. rocket science tech genius optimizes the companies trying to wind their way through the new systems that match ads to readers. i've had the ceo on twice. mostly for informational purposes since i have been worried about the segment too. in part because they were the
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kings of capital inailation. >> that was back in september. it went to a 93% premium to close at $56. remember those days? the stock traded up to 56 back in november. there was a follow on offering of 5 million shares. 3 million of them coming from insiders. still got a lot of stock left but he did sell some. the deal printed at 61. not far from the high. but it's been downhill ever since the stock losing 21% today alone as it traded down to as low as $20. what did rocket fuel do wrong? after reporting a quarter with 95% sales growth, they saw the growth slowing to a range of 62 to 69%. most companies would kill for that. loss is going to remain steep. the prospect of burning a profit far off from the horizon. there's a time when the market would have accepted this so-called slow down.
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not anymore. a downgrade from goldman sachs here. and it's far off from the offering at $61. the wholesale slaughter is nothing short of unbelievable frankly. they're now down 47% for the year. after reporting a quarter with only 30% revenue growth. mm which provides mobile advertising solutions is off 53% for the year after missing multiple projections. the project, another aider in the bedder of online commerce rallied to 17 and then climbed to 22 two days later before crashing back down just below $12 today. we don't know if this is truly them because we haven't seen an earnings report yet. that comes next week. what's going on with this e-commerce? i think there's so much competition and so many well
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capitalized companies going at it, at each other, that this devastation may have been inevitable exactly like it was in 2000. but just the speed with which it's happening is frankly breathtaking. >> that was easy. >> and believe it or not, there are many more companies waiting in the wings to become public still in this very same space. what will the future bring for rocket fuel? here's the bottom line. i suspect there will be a ton of mergers and maybe failures as they shake out the -- the shake out is proceeding the pace i guess. if the 2000 pattern plays out to its fullest, they'll remain toxic to both growth investors and value investors alike. at least until they trade through their cash and stop losing money. until then my advice is simple. why don't you rubber neck? it's not worth it to be a good samaritan. there may be nothing left here to save. becky in arkansas. becky. >> booyah cramer from the
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foothills of the ozark mountains. >> i love the ozarks. what's up? >> caller: well i've been watching the stock and they reported yesterday, had good earnings. their inventory was a little high but it looked like that was a good thing for them at the time and then it just crashed. >> yeah. you know, people don't like the networking stocks right now. they just feel like they're all overvalued. there were issues with the quarter. it wasn't as strong as i would have liked to see. you know, cisco reports next week. i'm not sure that's going to be good either. i'm not a bottom fisher in this group. there's too many stock with good dividends, good-bye backs and good growth that i don't need to be in ubnt. all right. the december mags it's too easy to look at and until then i suggest you keep rubber necking. don't jump in.
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up next, risky business. the biggest mistakes you can make managing your money. this one may surprise you. stay with cramer. >> coming up, photo on. their iconic imagery helps brands form followings worldwide. but could an investment in shutter stock improve your portfolio's imagine or is is it out of the picture after a steep drop in earnings? don't miss cramer's take. [ female announcer ] there's a gap out there. that's keeping you from the healthcare you deserve. but if healthcare changes, if it becomes simpler... if frustration and paperwork decrease... if grandparents get to live at home instead of in a home... the gap begins to close. so let's simplify things.
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let's close the gap between people and care. honestly, the off-season isn't i've got a lot to do. that's why i got my surface. it's great for watching game film and drawing up plays. it's got onenote, so i can stay on top of my to-do list, which has been absolutely absurd since the big game. with skype, it's just really easy to stay in touch with the kids i work with. alright, russell you are good to go! alright, fellas. alright, russ. back to work!
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here in america we make our kids learn shakespeare and chemistry and physics and history and calculus. it's mandatory that they take health class and be shown how to put a condom on a banana but you can graduate from high school and college and graduate school even without ever knowing how to balance a checkpoint. you can have a ph.d. in astrophysics but have no clue about how to manage your own money. that's why every once in awhile i take a step back and teach you some of the basics with some advice from my playbook on
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personal finance and simple nuts and bolts of investing. we're going to talk about risk. i know that for a huge portion of the population, as soon as you have enough money to save, your first impulse is to put it somewhere risk free. you finally build up wealth and perhaps retirement savings. perhaps it's for your kid's college fund. the last thing you want to do is put that money at risk, right? you're counting on it to still be there when you need it. you feel like you should put that money somewhere safe. maybe a certificate of deposit at the bank. treasury bonds or leave it in your savings account. i get that impulse. i understand it. i totally know why you would want to feel like your money is safe. but here's the thing. sometimes extreme prudence turns out to be another form of recklessness. you may think that leaving your money in a cd or keeping it in bonds is always responsible. after all, aren't u.s. fr
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treasuries the very definition? we're putting too much money in bonds or cds or heaven forbid a regular bank account actually is irresponsible. why? there's two words in the english language that sum it up. opportunity cost. i'm sure some of you are familiar with this term but for those that aren't, let me bring you up to speed about opportunity cost. whenever you make a choice about where to put your money the opportunity cost is what you're giving up by not putting your cash somewhere else. that may sound all theoretical and totally irrelevant to your day-to-day life but it's not. when you choose to stick all of your capital in something risk free like a cd or money market funds you're taking money that could be used for a better purpose and sticking it in a place where it's going to do hardly anything for you. right now, if you go to the branch of a big national bank and ask for a 5 year cd they'll likely offer you less than 1% interest. oh, man, i've seen them as low
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as a half a percent. to your money may be safe but it's literally not earning enough of a return to keep up with inflation. maybe you're a little more sophisticated and you want to invest in treasury bonds but at the moment, the ten year treasury is about 2.6% while the yield on the 30 year is 3.38%. we're going to look back and say that was ridiculously low. it's a pivoting return people. even if you're retirees living on a fixed income, you might want to consider putting your money somewhere else that can give you a better source of income. suppose you try to keep your savings in a savings account. wrong. a savings account will give you less interest than cds. i'll urging you to look at the opportunity cost of keep yourg money in risk free investments that offer puny returns. i'm not talking about doing outrageous things.
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you know i'm not irresponsible like that. when you start thinking of your money as capital. something that can be used to make more money, then you can imagine all the opportunities you're missing by sacrificing potential profits on the alter of safety. obviously as you get older bond versus a place in your portfolio. especially at retirement age but at this particular point in time i would tell you even older investors need to be thinking about sifting some of their bond money back into higher yielding dividends. stock likes the ones i talk about all the time. look, i know that those of you who are watching believe that the stock market is the greatest engine of wealth ever built. maybe you're watching also because you're a toddler who likes the animal noises. [ dog barking ] >> but i want to urge you not to be too conservative with your money. especially when rates are low. we live in a world where wages have been stagnant. where we have a real problem with income inequality and the prices of basic necessities like food are going much higher. i can't fix any of those problems but i can make you
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better equipped to deal with them and i think it's clear for for many of you your paycheck is not enough anymore. if you want to make enough money to live comfortably, you have to become a capitalist and i don't mean that in the modern sense where we're all capitalists except for a handful of college professors. i mean someone that make ace living not from their work but capital. someone who uses money to make money. that's why i think it's too risky for you to leave all or most of your money in low risk lower term vehicles like bonds. the best way to get ahead? the way that can work for everybody. by investing in the stock market. but it doesn't have to be stocks. maybe you have a terrific real estate opportunity. do your homework. if it's as good as it looks, take it. you need to find investments that will give you enough of a return so that your money is working for you rather than you needing to work for your money. i happen to think that high quality stocks, the ones we talk about, give you the best chance here because of all the information that is readily
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available to everyone and as long as you do your research and stay diversified i think you should be able to beat the market although if i told you before if you don't have the time and inclination to invest in monies stick your money in a low cost s&p 500 fund. in the short run there may be volatility but over a long time frame, years here you should look at an annual return of 8%. that's enough to double your money in under a decade and that's how you build wealth. that's how you live comfortably. not in cds. so the bottom line here, there's many of you watching this show still sitting on the fence about owning stocks. you worry it's too risky. you think it's rigged. i'm telling you that life is too risky. it's too risky for you to not invest in the stock market. if you only put your money in cds or treasury bonds then every penny you ever make will have to come to your i don't job. you don't want that. you want to build your own wealth and you can't do that
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without taking risks like those that come with owning a portfolio of stocks or investing in an index fund. maybe one day they'll go higher and generate real competition and i'll be singing a different tune. until then, though, high quality stocks with good balance sheets and growing dividends are much better bets. trust me, if you buy these kinds of stocks then within a few years from now i think you'll be glad you did. don't move because the lightning round is coming up next.
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up. a short word that's a tall order. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying and tomorrow we will up it yet again. for $175 dollars a month? so our business can be on at&t's network yup. all five of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line anytime for 15 bucks a month.
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low dues... great terms... let's close. new at&t mobile share value plans. our best value plans ever for business.
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it is time. it is time for the lightning round. what's that about? when you hear this sound and then the lightning round is over. are you ready? time for the lightning round.
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start with mark in michigan. mark. >> caller: yes, cramer, booyah. what do i do with sprint? >> you hold on to sprint? because sprint, i think merges with -- with t-mobile and i say that because my buddy pal has said that on air. he's a factual guy. let's go to david in new york. david. >> caller: booyah from new york. >> yeah. same right back at you. >> caller: thanks. looking at aa. >> they upgraded today. i like the report. it's been stalled. when a stock is stalled here you have to get a little bit of pull back. when you get that pull back, buy. i can't be more clear. terrence in maryland. >> caller: booyah. >> i'm liking that. >> caller: how are you? >> i'm fine thank you. how about you? >> caller: okay. long time listener.
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in fact, you're my new advisor and hear you once in awhile quote harry gross. >> i loved harry gross when i was growing up in philadelphia. absolutely. i learned a lot. what's up. >> caller: i could hear you. well, i'm concerned about bristol myers. it's a cramer fav and i've been with it a long time and watched it go down since the first of the year. it's down around 8.5%. >> people did not like the delay. it pushed it out. stephanie link who is co-portfolio manager with me, we felt that under $49 it would be a gift and we would pull the trigger. hasn't gotten there yet. it's gravitated back to 51. eric in new jersey. eric. >> caller: good afternoon. thank you for taking the call. >> no problem. what part of jersey?
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>> caller: hoboken. looking at the quarterly miss by briggs and stratton. >> i was bummed by that. i'm not going to say go for it. i wanted a better quarter. let's go to sandy. >> caller: thanks for always being there. >> i am here. it's like 2,300 shows. >> caller: wow. >> what's up. >> caller: a few months ago you were high on home street banks. >> the stock has been getting hammered here. financial services company in seattle but because interest rates are not going higher people don't like the stock. and that ladies and gentlemen is the conclusion of the lightning round. >> the lightning round is sponsored by td ameritrade. >> i could get you a job, you go
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down to louisiana, you go to texas, you go to colorado, new mexico, wyoming. you will not be able to find a house but you can get a job. >> i know. you can live in your car. >> you can live in your car and that's not so bad. we lived in our car and i have to tell you something, you would be surprised. homeowners insurance and collision. same in one policy. an umbrella. >> that works well. >> it was a joke. >> i did but we did not live in the same car. you said our car and people might have misinterpreted. >> you're right. i had a ford. he probably had a beamer. >> well, let me tell you jim i go back with snn, 1989. i've been with you over 25 years. >> holy cow, man i've been around. >> thank you for all you do for us retirees. you're a big asset. >> thank you i'm going to be joining you pretty soon at the rate of this show. >> heath in louisiana. >> what's going on.
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how's it going? >> i don't know. every time i go to louisiana i have a great time. why don't you invite me over. >> yeah, let's do it. >> all right. i'll see you in the french quarter. >> hey, what did you have for dinner last night? i cooked swordfish because quinoa for every single meal. i mix in some and nice piece of swordfish on top of it. >> it was delicious. >> they have a quinoa, flax and salsa sauce that knocks your socks off. ♪ [ tires screech ] chewley's finds itself in a sticky situation today after recalling its new gum. [ male announcer ] stick it to the market before you get stuck. get the most extensive charting wherever you are with the mobile trader app from td ameritrade.
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we are witnessing the wholesale destruction of a lot of small stocks. but companies with real earnings. take shutter stock. businesses can license high quality photos, illustrations and videos. pretty much every business out there needs imagines if not only for their website but you can't just use any picture you want for free. otherwise you're just begging for a lawsuit and that's why shutter stock comes in. they have a vast online library that allows companies large and small to license high quality imagines quickly and legally. this is a growing market where shutter stock is aggressively taking share. unfortunately this kind of company has gotten totally out of style at the moment. the stock had fallen from 102 down to 68 dollars in two
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months. when they reported after the close yesterday, the company delivered earnings on higher than expected revenues. isn't that what the market used to want? and they also raised their full year revenue guides. three or four months ago growth investors would have adored this quarter. well now, the stock fell as much as 8%. it ended up closing down 1.10%. shutter stock isn't cheap. the market just isn't going to pay up for earnings growth right now but if the stock keeps getting pounded maybe that's a different story. so let's check in with john, the founder and ceo of shutterstock to hear more about the quarter and the company's prospects. welcome to mad money. thank you for coming down. i know you're at the empire state building and i saw the video of where you are. pretty exciting stuff. >> it's been great. >> all right. now, i want people, first time on the show, i want them to understand you're kind of an online virtuous circle marketplace where people come to you and pay you and people who
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use the stuff pay you. so explain the model. >> yeah, we're a two sided marketplace and anybody can contribute their commercially released imagery to us. whether it's in video format or illustrated format or imagines and we sell them to our 1 million customers around the world to use to sell their products and services. >> disney is a customer. tell us how that works. >> anyone can be a customer. anyone can come in and buy imagines. all of our imagines are commercially released. >> so what. >> model releases and property releases. contributors that have shot them have given us the right to resell them. >> okay. >> so you can use them to sell products and services. >> now, people are watching right now and they're professional or amateur photographers and they see you. should they think that maybe if their stuff was sent to you that they might be able to make money? >> yeah. so we have paid out about $200
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million to photographers all around the world. some were amateurs before they found us and today their professionals. some of them are in areas around the world where they didn't have the opportunity to make this kind of money before and we have given them the ability to do that. >> so how do you match it? i mean, let's say i have got a -- i want to do a calendar and i want really fabulous pictures of the seven wonders of the world or the equivalent of. how do i type in what? there's millions of imagines. >> yeah, we have about 35 million imagines and one and a half million videos and we constantly work on trying to figure out the best way to search through our catalogs. we constantly innovate on different ways to explore and to find the imagines and videos that businesses need in their every day lives. >> you teamed up with an old friend of company of mine, exact target. is that a way to be able to figure out the imagines i want on my website. >> yeah. we're working on different platform strategies with places
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like facebook. any advertiser inside facebook can use it in an ad and we're working with sales so they can use our imagines in their social posts. we're working on penetrating different companies in different ways to get into work flow in the way that businesses are using imagines. >> can you explain the difference between you and a private company that went private for 3 billion. well, $2 billion now which is the company that used to be the dominant player when it was public. >> yeah. it's been around since we started. i started this company 11 years ago. so this is not just two weeks agatha this happened. we have been completing with other companies in the space for awhile and we started with a different strategy. we're a technology company to start. we happened to sell a digital media asset but we're a two side marketplace. i started the company with my own code. i took the first 30,000 imagines and when i started to learn over time is if we innovate on the product and different ways to
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sell, we were the first two side marketplace to have a subscription market for instance. >> right. >> that we can get these imagines to our customers quickly and more effectively at the price point they want with the search tools they're used to having. >> last question. it is -- you understand this -- what's happening to high growth stocks. they have gone out of favor. there's really nothing you can do about it other than just keep doing your job, right? >> we have been doing this for 11 years. i've seen a lot of different market situations. we have been public for two years. i own a lot of this company. this isn't going to be the last time the market cracks. >> good. i want people to learn the company. once you learn it you want to be a part of it. so thank you so much to john, the ceo of shutterstock. this is the kind of novel great thing you might want to be involved with. maybe you own the stock or maybe send in your imagines. mad money is back after the break. ♪
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isn't. we have to find out on monday about apple. apple go buy harmon and pandora you'll do us a big favor. i promise to try to find >> narrator: in this episode of "american greed: the fugitives"... they were the heady, get-rich-quick days of the dot-com boom. >> promising internet riches was the way to get into somebody's wallet. >> narrator: among the companies that raises millions -- an online-video start-up with a famous pitchman who exudes trust. >> i'm sure you've heard of it. it's called the "internet." >> narrator: but the website is a sham. its only purpose is bilking investors of millions, and when the feds come knocking, one of the men who's allegedly running the scheme heads to sea. but first, street criminals turn to white-collar crime. >> this is the first time that i had seen people who graduated

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